Tanger Factory Outlet Centers Inc. (SKT 1.33%) announced third-quarter 2018 results on Thursday after the market closed, including rising occupancy rates, modest revenue growth, and a slight positive revision to its full-year outlook for funds from operations (FFO). But the shopping-center real estate investment trust (REIT) also offered a cautiously optimistic view of the year ahead.

With shares up 3% on Friday in response, let's dig deeper to see what drove Tanger Outlets to start the second half. 

Man holding several shopping bags in an outdoor shopping center

Image source: Getty Images.

Tanger Factory Outlets results: The raw numbers


Q3 2018

Q3 2017

Year-Over-Year Growth


$124.2 million

$120.8 million


Net income (loss) available to Tanger common shareholders

($22.2 million)

($15.5 million)


Net income (loss) per diluted share




Data source: Tanger Factory Outlet Centers.

What happened with Tanger Factory Outlets this quarter?

  • Tanger's net loss this quarter stemmed from a $49.7 million non-cash impairment charge related to the re-merchandising of an outlet center in Jeffersonville, Ohio. The net loss in last year's third quarter was driven by charges related to early extinguishment of debt, and a separate non-cash impairment charge related to an unconsolidated joint venture in Canada.
  • Adjusted funds from operations, an industry metric that essentially measures Tanger's cash flow from operations, were roughly flat on a year-over-year basis at $61.9 million, or $0.63 per share.
  • Trailing 12-month (TTM) blended average rental rates, excluding the impact of strategic remerchandising activities, increased 11.4% on a straight-line basis, and rose 4.1% on a cash basis.
  • Consolidated portfolio occupancy was 96.4% at the end of the quarter, up 80 basis points from 95.6% last quarter, and down from 96.9% a year ago.
  • TTM average tenant sales productivity was $383 per square foot, flat from last quarter and up from $381 in the same year-ago period.
  • TTM same-center tentant sales grew 1.1%.
  • Tanger commenced 361 leases totaling 1.8 million square feet over the past year.
  • Tanger also recaptured 17,000 square feet this quarter related to bankruptcies and brandwide restructurings by retailers, bringing its total so far in 2018 to 123,000 square feet.
  • Hurricane Florence caused seven Tanger Outlet Centers (or 13% of the portfolio) to close for a total of 27 days this quarter, causing "a significant reduction in traffic and tenant sales" over several weeks for these centers.

What management had to say

Tanger CEO Steven Tanger stated:

We are pleased to see continued incremental improvement in the operating metrics we achieved during the quarter. In conjunction with our tenants, we implemented successful marketing campaigns and events, and we continue to drive engagement as consumers exhibit their ongoing desire to discover values and shop at our centers. We are encouraged by our progress and the overall improvement in the tone of our interactions with tenants and prospects. Our team has successfully increased occupancy by 80 basis points since the end of the second quarter to 96.4% for our consolidated portfolio. However, we remain cautious in our expectations for 2019. There may still need to be selective adjustments to rents and term as we aggressively work to ultimately further increase occupancy with productive tenants. As we have demonstrated throughout our history, the benefit of our proven approach of working with limited, specific tenants to maintain occupancy allows us to be opportunistic in our pursuit of long-term growth.

Looking forward

Given its performance through the first three quarters of the year, Tanger updated its guidance for full-year 2018 funds from operations per diluted share to be in the range of $2.42 to $2.46, narrowed from $2.40 to $2.46 previously. It also reduced its outlook for 2018 net income per share to be in the range of $0.46 to $0.50, down from $0.95 to $1.01 before, primarily because of the non-cash impairment charge it incurred this quarter.

All things considered, there was plenty to love in this slightly better-than-anticipated quarter, particularly as Tanger Outlets continues to not only achieve operational improvements but also demonstrates the value its properties offer to retailers and consumers alike.